The Federal Court has ordered MLC Limited (MLC) pay a $10 million penalty for failing to pay promised benefits, resulting from a lack of appropriate systems to administer its insurance policies.
The Court also made declarations that MLC had contravened the ob体育 Act, the Corporations Act and the Insurance Contracts Act for failures to:
- pay a rehabilitation benefit to 119 customers who had undertaken approved rehabilitation programs following injury and/or disability;
- have adequate processes to review and, if appropriate, promptly update its medical definitions for critical illnesses in certain policies; and
- adequately train and monitor staff about communications to customers regarding the administration of their policy, including policy schedules and premium notices.
ob体育 Deputy Chair Sarah Court said, 鈥楥ustomers should be able to trust that their insurer will pay the benefits promised to them and keep them properly informed if there are changes to their policies.
鈥楾he failings recognised by the Court are the result of poor governance, poor controls and poor systems, such as legacy IT systems. MLC customers deserve to have their insurance policies administered properly.
鈥榦b体育 will continue to take action against insurers who aren鈥檛 acting in accordance with their duty of utmost good faith towards their customers.鈥�
In addition to the $10 million penalty, MLC has provided approximately $11.8 million in remediation to approximately 1,000 impacted customers.
Justice Moshinsky has also ordered MLC to publish an adverse publicity notice on its website.
Download
Background
MLC sold life insurance policies providing coverage for income protection, critical illnesses and other personal risks.
Moneysmart helps Australians take control of their money with free tools, tips and guidance. Find out more about how life insurance works and .